“The more elaborate our means of communication, the less we communicate." This quote by Joseph Priestley from the 1700’s is as true now as when it was written. In commercial real estate, clear understandable communication is key to a successful transaction. Brokers, sales agents and property managers bridge communications between a multitude of disciplines all using their own slang, anachronisms, and arcane terms never to be found in a computer word search. Below are a few uncommon terms used in leasing commercial real estate that might help take some of the fear out of the unknown and make the next real estate discussion less intimidating.
1) “CAF” Common Area Factor. In multi-tenant office buildings, common halls, common restrooms, and common lobbies are assigned a percentage of space based on the structures total square footage. As an example, a building’s Architect determines that 8,500 square feet of its new buildings 85,000 square feet are common to all Tenants. Therefore, the building carries a 10% CAF. This 10% is added to all Tenant’s Net Usable Area to determine its Net Rentable Area. Another common term for CAF is “load factor”. In buildings with huge atriums, expansive lobbies or other mega-common spaces, the CAF could theoretically be so high, it would be prohibitive to pass it all through to the Tenants. Therefore, in large atrium style buildings, the CAF is artificial and set by the landlord and architect to what the market will bear. This artificial number generally is between 12-15%.
2) “GLA” Gross Leasable Area. This is a retail leasing term used to mean measuring a space from outside wall to outside wall, meaning the whole space or, building. This might also be considered a midpoint wall measurement in retail, multi-tenant divided spaces.
3) “RSF” Rentable Square Feet or Net Rentable Area, this is an office leasing term that measures a total floor area, excludes vertical penetrations to the space such as elevators, utility ducts, and staircases. RSF includes a CAF and is generally what determines the square footage number used to calculate base rent.
4) “USF” Usable Square Feet or, Net Usable Area. Another office leasing term that is determined by the Rentable Square Feet (“RSF”) of the floor minus (-) common areas or CAF.